Indonesia government may stop Air Asia from taking over Batavia Air

The Indonesian government may cancel the acquisition of local airline Batavia Air by Malaysia’s AirAsia Bhd and its Indonesian partner if the transaction breaches the ownership limit imposed on foreign companies in national airlines.

The English weekly, Sunday Post, quoted the Director General of Indonesian Transportation Ministry Herry Bhakti Gumay as saying that AirAsia and its partner in the acquisition, PT Fersindo Nusaperkasa, had yet to report their acquisition to the ministry.

Herry also said the ministry would not hesitate to revoke Batavia Air’s flight permit, and that they are giving both AirAsia and Batavia a month to report the acquisition to the ministry.

AirAsia and its Indonesian partner Fersindo, owner of a 51 per cent stake in Indonesia AirAsia (IAA), signed an agreement on Thursday to buy Metro Batavia, the owner of Batavia Air, for US$80 million (Rp 756 billion).

According to the acquisition plan, AirAsia would own a 49 per cent stake in Metro, while Fersindo the remaining 51 per cent in order to comply with Indonesia’s ownership rule.

Seventy-six per cent of the shares are due to be purchased this year and the remainder by 2013, the weekly reported.